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Friday, February 1, 2013

Delhi High Court: Amendment of a Passing Off Suit to Trademark Infringement Action Not Substantive

In a systematically reasoned decision dated January 24,
2013, a Division Bench of the Delhi High Court presided by Justice Sanjay
Kishan Kaul, held that amendment of a suit for passing off to one for trademark
infringement amounted to addition of an alternative relief with the cause of
action in both instances being substantially the same.

Consequently, according to the
Court, if a suit for passing off is proceeded ex parte against the Defendants for non-appearance, non-issuance of
summons/notice to the Defendants when the suit is amended to one for trademark
infringement does not vitiate the proceedings and the subsequent ex parte decree. This would apply all
the more when the fact of a pending trademark application of the Plaintiff is
within the knowledge of the Defendant and has been clearly pointed out in the
original Plaint.

These were the observations of
the Court in an appeal against an order passed under Order 9, Rule 13 of the
Code of Civil Procedure wherein the Single Judge had set aside the original ex parte decree on the ground that summons
had not been issued to the Defendants when the Plaint was amended from one for
passing off to a trademark infringement action. The mark in question was “FLIGHT
CENTRE”.

In arriving at its conclusions,
the Court also relied upon the Second Proviso to Order 9, Rule 13 of the Code
which deals with setting aside of ex parte decrees as follows:

13. Setting aside decree ex parte against defendant- In any case in which a decree is passed ex parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or' that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit;

Provided that where the decree is of such a nature that it cannot be set aside as against such defendant only it may be set aside as against all or any of the other defendants also:

Provided further that no Court shall Set aside a decree passed ex parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim.

In the peculiar facts of the
case, when the suit was one for passing off, the Defendants had been
represented by counsel. However, when
settlement talks broke down between the parties, representation for the
Defendants in the Court too stopped. Consequently, the matter proceeded ex parte.

Subsequently, the suit was
amended to bring on record the fact of trademark registration in favour of the
Plaintiff (the Appellant in the Appeal before the Division Bench). At this
point, the trial Court did not deem it necessary to issue notice/summons to the
Defendants, and no reasons were recorded for non-issuance of summons.

The suit was ultimately decreed ex parte in favour of the Plaintiff on
10.9.2010. Pursuant to the decree, the Plaintiff issued a notice for contempt
against the Defendants for using the trademark in violation of the decree. Settlements
talks were again held between the parties in April 2011.

After assuring the
Plaintiff/decree holder that the Defendants intended to use “FLIGHT SHOP”
instead of “FLIGHT CENTRE”, the Defendants moved an application under Order 9,
Rule 13 to have the ex parte decree
set aside. The trial court/Single Judge accepted the contention of the
Defendants and set aside the ex parte decree.

It was against this order of the
Single Judge that the Plaintiff preferred an appeal. Following are relevant extracts
from the DB’s decision reversing the Single Judge’s order and affirming the
original ex parte decree:

“24. The facts, as they
emerge from the suit records, have already been noticed above in detail at the
inception of the judgement. The facts show that the counsel did enter
appearance for defendants 1 to 4 and thereafter continued to appear for the
respondents. It is also a fact that there is nothing on record to show the
completion of service qua respondent No.1 herein.

It has been rightly
emphasized by learned counsel for the appellant that the service of summons is
in furtherance of rules of audi alteram partem, i.e., opposite side may get a
chance to answer the case and no one should be condemned unheard. Let us say,
if a defendant having advanced knowledge of the summons enters appearance
through counsel and accepts notice in Court, can it still be said that the
technical process of issuance of summons and notices to him should still be
adhered to? The answer to this question, in our view, would be in the negative.

This is the reason why the
word used in Order V Rule 1 (1) of the said Code is ―may instead of ―shall. This position is abundantly
clear in view of proviso
added by the amendment of 1976 to Order V Rule 1 of the said Code in addition
to the existing proviso, in terms whereof no such summons are to be issued
where a defendant appears at the presentation of the plaint and admitted the
plaintiff's claim.

25. The objective of the
process of issuance of summons is to obtain the presence of the defendant for
final opportunity to be given to him to rebut the claim against him. Thus, if
he appears at the initial stage in a sense there is waiver of the right to have
summons served on him.

26. In our view the
significance of the judgement in Sunil Poddar & Ors. case (supra) has
somehow escaped the attention of the learned Single Judge, i.e., the
observations contained in para 19, record that if the Court is convinced that
the defendant had otherwise knowledge of the proceedings and he could have
appeared and answered the plaintiffs claim, he cannot put forward a ground of
non-service of summons for setting aside ex parte decree passed against him by
invoking Order IX, Rule 13.

28. In the present case if
the sequence of facts is seen keeping in mind the aforesaid principles it would
be apparent that post issuance of summons and notice in the suit, meetings were
held inter se the parties. The defendants had entered appearance and dates were
taken by both parties. This is apparent from documents exchanged inter se
parties in the form of e-mails dated 3.1.2006 and 23.1.2006 whereafter also
time was taken for settlement. It is thereafter that the respondents appeared
to have abandoned the right to defence by stopping to appear.

29. We fail to appreciate as
to how weightage can be given to an additional affidavit filed on behalf of the
respondents stating that the counsels who were entering appearance did so in a
casual manner and were not authorized to do so. It cannot be seriously
contended that these counsels were appearing just for the sake of it for the
respondents, when simultaneously the respondents were in serious discussions
with the appellant.

These counsels are stated to
be also the counsels for respondent No.1 in the Share Purchase Agreement as
also the counsels who had filed the application for registration of the mark
FLIGHT SHOP in 2007 after the respondents had been proceeded ex parte. The
story, thus, set up by the respondents on behalf of respondent No.1 is
completely unbelievable.

34. The more significant
aspect is arising from the plea that if an amendment is sought by the
plaintiff, the defendants must be put to notice thereof as they may not be
interested in the suit as originally framed but the consequences may be
different post amendment.This is
a salutary principle over which there can be no dispute. However,
simultaneously it is not as if every minor amendment would necessitate such a
right being given to defendants who are ex parte. It will have to be seen as to
what is the nature, character and effect of the amendment.

35. Learned counsels for
both the parties sought to emphasise the aforesaid aspect in the context of the
nature of a suit for passing off and that of infringement of trademark. Learned
counsel for the appellant, as noticed above, has canvassed that the aspect of
application for registration of trademark already formed a part of the original
plaint.

It is only the subsequent
development of registration which was brought in through the process of
amendment which only fortified the case of the appellant, thereby effecting the
degree of proof in view of the provisions of Section 29 (3) of the TM Act
raising a presumption in favour of the appellant.

We find force in the
contention of the learned counsel for the appellant, especially when there was
really no change in the nature of relief in the suit post the amendment. In
species the relief sought essentially was for an injunction against the
respondents to restrain the respondents from using the mark ―FLIGHT CENTER. This
relief did not undergo any change because of the amendment. The only aspect
incorporated is the factum of registration of the trademark and the consequent
relief in respect thereof. No additional relief qua
damages or other amounts has been inserted and no relief in that behalf was
granted.